How to Create a General Partnership in Mississippi | A Complete Guide

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Create a General Partnership in Mississippi

If you would like to create a general partnership in Mississippi, there are a few guidelines that you should understand. A general partnership is one of the things that a businessman considers since it comprises two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills, and each partner shares in the profits and losses from the business. You can start an LLC in Mississippi for your general partnership to personally carry potentially unlimited liability.

Knowing about the general partnerships will benefit you and several partners, making you form your business properly. If you want to know more about the general partnership, follow our steps to Create a General Partnership in Mississippi.

Webinarcare Editorial Team will help you create with thorough research and market study. Before starting a general partnership in Mississippi, you must be guided by all the factors we have gathered in this article.

Steps in Creating a General Partnership in Mississippi

What is General Partnership in Mississippi?

A general partnership in Mississippi is a business structure where two or more individuals come together to establish a business and agree to share the profits, losses, and management responsibilities. Each partner contributes skills, resources, and capital to the business and makes decisions collaboratively. In a general partnership, partners have unlimited personal liability for the debts and obligations of the business, meaning their personal assets can be used to cover any debts or liabilities incurred by the partnership. This type of business structure is relatively simple to form and offers flexibility in decision-making and management but lacks the legal protection of limited liability offered by other structures like Mississippi Corporations or limited liability partnerships.

It is recommended that you consult to Mississippi Business Attorney before beginning the process of forming your general partnership. They will understand what is best for you and your company. To shield your personal assets from corporate debts, you can always Start an LLC in Mississippi rather than a general partnership.

– WEBINARCARE EDITORIAL TEAM

Example of a General Partnership

An example of a general partnership could be a small marketing agency created by two friends, Shane and Jane. Shane has a background in graphic design, while Jane has experience in digital marketing strategies. They decide to join forces and create a marketing agency that offers clients a combination of their expertise.

Shane and Jane contribute their skills, resources, and capital to start the business. They agree to share the profits, losses, and management responsibilities. Both partners actively participate in the agency’s day-to-day operations, making decisions and working with clients collaboratively.

In this general partnership, Shane and Jane have unlimited personal liability for any debts or obligations incurred by their marketing agency. If the agency faced financial difficulties, both partners’ personal assets could be used to cover the debts. However, the simplicity and flexibility of the general partnership structure allow them to manage and grow their business together easily.

Individuals looking to collaborate and numerous service providers have chosen general partnerships as their preferred business entity. That’s frequently because of its simple design, low price, and simplicity of setup. Some general partnership examples include: 

  • Providing Professional Services (architectural firms, medical clinics, etc.)
  • Selling goods at retail 
  • Opening a restaurant
  • Mississippi Business Consulting

General partnerships are also formed by partners who are spouses or other family members who want to operate a business together.

Steps in Creating a General Partnership in Mississippi

To create a general partnership in Mississippi, you must follow the guidelines below: choosing a business name, making a partnership agreement, requesting an EIN, getting a license and permit, and opening a bank account. 

Step 1: Choose a Business Name

Naming your business is one of the most important activities during the startup phase, especially if you will form an LLC in Mississippi. Your general partnership name serves as the foundation for your brand and is what clients use to connect you to the products or services you offer. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity without being hampered by irrelevant factors. 

For example, let’s assume the general partnership focuses on providing eco-friendly landscaping solutions. A potential name for this partnership could be “GreenScape Innovations.” This name highlights the business’s core values (eco-friendly) while also showcasing the industry (landscaping) and the innovative approach the partners aim to bring to the market.

For your to come up with this business name idea, here are some guidelines to consider when choosing a name for a general partnership:

  • Reflect on the Nature of the Business: Choose a name representing your products or services, and communicate your business’s essence to your target audience.
  • Keep it Simple and Memorable: A short, easy-to-pronounce name will be easier for customers to remember and share with others.
  • Make it Unique: Research the names of other businesses in your industry to ensure your chosen name stands out and does not infringe on any existing trademarks or copyrights.
  • Consider the Partners’ Names: Some general partnerships incorporate the partners’ names in the business name (e.g., Smith & Johnson Consulting). However, this approach may only be suitable for some businesses, especially if the names are difficult to pronounce or remember.
  • Test the Name: Share the potential name with friends, family, and potential clients to gather feedback and ensure it resonates with your target audience.
  • Check for Domain Availability: Research the availability of your chosen name as a domain name for your website and on social media platforms to ensure a consistent online presence.
  • Avoid Limiting your Business Scope: Choose a flexible name to accommodate future product or service changes. Avoid using specific locations, product names, or niche markets in the name if you plan to expand or diversify later.
  • Comply with Legal Requirements: Ensure the chosen name complies with any legal requirements or restrictions in your jurisdiction, such as avoiding misleading or offensive terms.
  • Consider Professional Input: Consult with Mississippi Business Attorney or trademark specialist to ensure your chosen name is legally sound and can be registered as a trademark if necessary.

By following these guidelines, you can choose a name for your general partnership that is memorable, unique, and effectively communicates your business’s essence.

In addition, most general partnership businesses use the last name of all of their partners.  For instance, if Jennie Kim and Lalisa Manoban enter business together, the partnership name is “Kim & Manoban” by default. However, if you would like to form a business name under something more appropriate, such as “EJI Design and Build,” then you’ll need to File a DBA in Mississippi with Mississippi Secretary of State.

Filing a DBA in Mississippi has one method, online, which costs around $25. There is five years validity in renewing your DBA. 

In Mississippi, if you do not wish to file your general partnership business right away but want to hold the name that you have decided on, then you can reserve your business name for 180 days. You must file a name reservation application in the Mississippi Secretary of State to keep the name. 

Step 2: Make a Partnership Agreement

After you have chosen a business name for your general partnership, the next step would be making a partnership agreement in Mississippi. A partnership agreement is a crucial document that outlines the terms and conditions governing a partnership. It helps to establish a clear understanding of each partner’s roles, responsibilities, and expectations and prevents disputes and misunderstandings.

Additionally, it discusses business management guidelines and potential contingencies that may arise, such as a partner’s passing or a partner’s decision to leave the partnership.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Mississippi. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Mississippi

After completing the partnership agreement, you should get or seek an Employer Identification Number (EIN) in Mississippi. An EIN will serve as your general partnership’s tax identification number. The Internal Revenue Service can provide you with an EIN. (IRS). It is a nine-digit number comparable to your Social Security number. EIN, on the other hand, is distinct from SSN. It is exclusively used for business-related operations, such as filing general taxes. The form must be filled out and sent to the IRS website. Obtaining an EIN cost between $30 and $280. 

The application of an EIN in Mississippi can be through the following:

  • Apply Online- The Online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4PDF application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

You can benefit in various ways once you obtain your EIN number. It will give your general partnership the final advantage to operate at its full potential without legal or court problems.

Step 4: Get a License and a Permit

You must have Mississippi Business License before your general partnership business operates. A business license is a document granted by a government agency that allows you to operate your business in the territory governed by that agency.

To legally operate your partnership, you’ll need a business license. You may need more than one license in Mississippi. Numerous general partnership licenses need to be filed and renewed regularly.

In Mississippi, the business license fee costs about $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Mississippi.

Step 5: Open a Bank Account

After filing and receiving your general partnership license, you should open a bank account for yourself, your clients, and your employees.

A US bank account may make your business dealings in Mississippi easier because it increases your company’s authenticity and profitability. Most banks require an EIN for firms other than sole proprietorships to open a business account. Keeping separate finances also prevents you from combining personal and professional finances.

If you would like to open a bank account in Mississippi, check out the Best Bank for Mississippi Small Business.

Pros and Cons of a General Partnership in Mississippi

In forming a general partnership in Mississippi, there are pros and cons that you may experience. I will list the pros and cons for you to understand why and how a general partnership is crucial. 

Pros of Forming a General Partnership in Mississippi

  • Easy and Inexpensive to Form: General partnerships are relatively simple to establish, requiring minimal paperwork and registration costs compared to other business structures like corporations or limited liability companies.
  • Decision-Making: Partners can pool their skills, knowledge, and resources, leading to more efficient and effective decision-making and business operations.
  • Flexibility: General partnerships offer flexibility in management structure, profit distribution, and decision-making processes, allowing partners to customize their business relationships to best suit their needs.
  • Tax Benefits: In most jurisdictions, general partnerships are not taxed as separate entities. Instead, profits and losses are passed through to the partners, who report them on their income tax returns. This avoids the issue of double taxation that affects corporations.
  • Greater Access to Capital: With multiple partners, a general partnership may have increased access to capital and resources compared to a sole proprietorship.

Cons of Forming a General Partnership in Mississippi

  • Unlimited Personal Liability: In a general partnership, all partners have unlimited personal liability for the debts and obligations of the business. This means that each partner’s personal assets can be used to cover any debts incurred by the partnership, which can be a significant risk.
  • Potential for Conflicts: As partners share management and decision-making responsibilities, disagreements or conflicts can arise, negatively impacting the business’s operations and success.
  • Limited Lifespan: A general partnership’s existence is often tied to the lives of its partners. The partnership may be dissolved if a partner withdraws, becomes incapacitated, or dies, potentially leading to instability and uncertainty.
  • Difficulty in Raising Capital: While general partnerships may have more access to capital than sole proprietorships, they may still need help raising funds compared to corporations or limited liability companies, as investors may be more hesitant to invest in a business with unlimited personal liability.
  • Lack of Legal Distinction: Unlike corporations or limited liability companies, general partnerships do not have a separate legal identity from their partners, limiting the partnership’s ability to enter into contracts or own property in its name.

When considering a general partnership, weighing the pros and cons and assessing whether this business structure aligns with your goals, risk tolerance, and desired level of management involvement is essential.

Maintain Business License in Mississippi

You must maintain or renew your business license regularly now that you have established your general partnership. Make time at least once a year to check the status of your licenses. Then you will get everything important. You can deal with any problems that arise. In Mississippi, the business license fee ranges from $50 – $300, and varies by jurisdiction and license type.

Pay Your Taxes in Mississippi

Even if you have established your general partnership in Mississippi, pay your taxes and keep everything up to date so you won’t pay any penalty. 

Mississippi taxes information will help you with what to pay before or during the operation of your professional corporation. You can check out the Mississippi Small Business Taxes to further understand why you must pay your taxes on time. 

Can I Convert My General Partnership Into Another Business Entity in Mississippi?

By following the appropriate state procedures, you can convert your general partnership into another business entity, such as Mississippi Corporation converting to an LLC; or Sole Proprietorship to Mississippi LLC. This may involve filing conversion documents with the Mississippi Secretary of State’s office and paying any required fees.

FAQs

What is a general partnership in Mississippi?
A general partnership is a business entity where two or more individuals own and operate a business together in Mississippi.
How do I form a general partnership in Mississippi?
To form a general partnership in Mississippi, you need to file a Certificate of Partnership with the Secretary of State.
Can I operate a general partnership in Mississippi without registering it with the Secretary of State?
No, you cannot operate a general partnership in Mississippi without registering it with the Secretary of State.
Is there a fee to register a general partnership in Mississippi?
Yes, there is a fee to register a general partnership in Mississippi. The fee is $50.
What are the requirements for forming a general partnership in Mississippi?
There are no formal requirements for forming a general partnership in Mississippi, but it is recommended that you have a written partnership agreement.
Can a general partnership in Mississippi have one owner?
No, a general partnership in Mississippi requires two or more owners.
What is a partnership agreement in Mississippi?
A partnership agreement is a document that outlines the terms and conditions of the partnership.
Is a partnership agreement in Mississippi legally required?
No, a partnership agreement in Mississippi is not legally required, but it is recommended.
What information do I need to include in a partnership agreement in Mississippi?
You should include the names of the partners, the partners’ contributions, each partner’s share of profits and losses, and the duration of the partnership.
Where can I find a template for a partnership agreement in Mississippi?
You can find templates for partnership agreements online or hire a lawyer to draft one for you.
What taxes do general partnerships in Mississippi have to pay?
General partnerships in Mississippi are not taxed on their profits. Instead, the partners individually report their share of profits and losses on their personal tax returns.
Can a general partnership in Mississippi have employees?
Yes, a general partnership in Mississippi can have employees.
Do partners in a general partnership in Mississippi have limited liability?
No, partners in a general partnership in Mississippi have unlimited liability for the debts and obligations of the partnership.
What happens if a partner in a general partnership in Mississippi dies?
If a partner in a general partnership in Mississippi dies, the partnership is dissolved.
Can I dissolve a partnership in Mississippi anytime?
Yes, you can dissolve a partnership in Mississippi anytime by filing a notice of dissolution with the Secretary of State.
Are general partnerships in Mississippi required to renew their registration?
No, general partnerships in Mississippi are not required to renew their registration.
How long does it take to register a general partnership in Mississippi?
It typically takes 5-7 business days to register a general partnership in Mississippi.
What is the difference between a general partnership and a limited partnership in Mississippi?
In a general partnership in Mississippi, all partners have equal responsibilities and share in profits and losses. In a limited partnership, there are one or more general partners who manage the business and one or more limited partners who only contribute capital and share in profits.
Are there any restrictions on who can form a general partnership in Mississippi?
No, there are no restrictions on who can form a general partnership in Mississippi.
Can a non-US resident form a general partnership in Mississippi?
Yes, a non-US resident can form a general partnership in Mississippi.
Can a lawyer help me form a general partnership in Mississippi?
Yes, a lawyer can help you form a general partnership in Mississippi.
Can I change the name of my general partnership in Mississippi?
Yes, you can change the name of your general partnership in Mississippi by filing a statement of amendment with the Secretary of State.
Can I transfer ownership in a general partnership in Mississippi?
Yes, you can transfer ownership in a general partnership in Mississippi, but you may need to amend your partnership agreement.
How do I dissolve a general partnership in Mississippi?
To dissolve a general partnership in Mississippi, you need to file a notice of dissolution with the Secretary of State.
Will I need to notify the IRS if my general partnership dissolves in Mississippi?
Yes, you will need to notify the IRS if your general partnership dissolves in Mississippi.
Can I restart a dissolved general partnership in Mississippi?
Yes, you can restart a dissolved general partnership in Mississippi.
Do I need a registered agent for my general partnership in Mississippi?
Yes, you need a registered agent for your general partnership in Mississippi.
Can I be my own registered agent for my general partnership in Mississippi?
Yes, you can be your own registered agent for your general partnership in Mississippi.
Is a general partnership in Mississippi a separate legal entity?
No, a general partnership in Mississippi is not a separate legal entity.
What information do I need to provide on the certificate of partnership in Mississippi?
You’ll need a business name, the partners’ names and addresses, and the partnership’s taxpayer identification number.
Are there any fees to file the certificate of partnership in Mississippi?
Yes, there is a fee of $50 to file the certificate of partnership in Mississippi.
Do partnerships require a written agreement in Mississippi?
Although Mississippi doesn’t require a written agreement, it is highly recommended to avoid future disputes.
Is a partnership agreement legally binding in Mississippi?
Yes, a signed partnership agreement is legally binding in Mississippi.
Can the partnership agreement be changed in Mississippi?
Yes, amendments to the partnership agreement can be made if all partners agree.
Can a foreign partnership form a partnership in Mississippi?
Yes, a partnership that was formed in another state can form a partnership in Mississippi with a certificate of authority.
Do general partnerships have to file annual reports in Mississippi?
No, general partnerships are not required to file annual reports in Mississippi.
Are there any tax benefits to forming a general partnership in Mississippi?
Partnerships in Mississippi are not subject to income tax, only the individual partners are.
Do partners have personal liability for the partnership’s debts in Mississippi?
Yes, partners share personal liability for the debts and obligations of the partnership.
Can a partner be held personally liable for the actions of another partner in Mississippi?
Yes, partners can be held liable for each other’s actions in Mississippi.
What happens if a partner wants to leave the partnership in Mississippi?
The partnership agreement will determine how to handle the departure of a partner in Mississippi.
Can a general partnership be sued in Mississippi?
Yes, a partnership can be sued in Mississippi just like any other legal entity.
Can a partnership in Mississippi own property?
Yes, a partnership can own property in Mississippi.
Can a partnership in Mississippi have employees?
Yes, a partnership can hire employees in Mississippi.
Can a partnership in Mississippi open a bank account?
Yes, a partnership can open a bank account in Mississippi.
Can a partnership in Mississippi apply for a business license?
Yes, a partnership can apply for a business license in Mississippi.
Can a partnership in Mississippi take out loans?
Yes, a partnership can take out loans in Mississippi.
Do partners need a written agreement to divide profits in Mississippi?
No, profit sharing can be determined by oral or written agreement in Mississippi.
Can partners in Mississippi share profits unequally?
Yes, partners can agree to share profits unequally in Mississippi.
Do partners in Mississippi have to contribute equal amounts of capital?
Partners in Mississippi are not required to contribute equal amounts of capital.
Are partners in Mississippi considered employees of the partnership?
No, partners are not considered employees in Mississippi.
Can partnerships in Mississippi dissolve without court intervention?
Yes, partnerships can dissolve voluntarily without court intervention in Mississippi.
Do partners have to provide notice to each other before withdrawing from the partnership in Mississippi?
Yes, partners have to provide reasonable notice to each other before withdrawing from the partnership in Mississippi.
Can partners compete with the partnership in Mississippi?
Partners are free to engage in their own business ventures in Mississippi, but it may be restricted by the partnership agreement.
Can a partnership in Mississippi be changed to a different business structure later on?
Yes, a partnership can be converted to a different business structure in Mississippi by filing the appropriate paperwork.
Are there any restrictions on the type of business a partnership can conduct in Mississippi?
Partnerships in Mississippi are generally free to engage in any lawful business activity.

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Conclusion

A general partnership can be viable for individuals looking to establish a business in Mississippi with shared decision-making, management responsibilities, and profits. This type of business structure is relatively simple to establish and offers flexibility in operations. However, it is essential for potential partners to carefully consider the unlimited personal liability aspect of general partnerships, which means that each partner’s personal assets could be at risk to cover any debts or obligations incurred by the business. Before forming a general partnership, the partners should have a clear and well-drafted partnership agreement that outlines the roles, responsibilities, profit-sharing, and dispute-resolution mechanisms to ensure a smooth working relationship and minimize potential conflicts. Partners should also explore other business structures, like limited liability partnerships or corporations, to determine the best fit for their needs and goals.

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